Oil prices neared a five-month high amid concerns that escalating tensions in the Middle East could draw the United States into the region more directly. Asian stocks were mixed after a fall on Wall Street.
West Texas Intermediate (WTI) crude oil rose as much as 1.1% in Asian trading, after climbing more than 4% on Tuesday. Hong Kong stocks fell, but Japanese stocks rose, following a 0.8% decline in the S&P 500 in New York. Tuesday’s weaker-than-expected economic data exacerbated the decline in US stocks and boosted the bond market ahead of the Federal Reserve’s monetary policy decision.
The Bloomberg Dollar Index was little changed in Asian trading after posting its biggest gain in a month in the US session. US Treasuries have held gains since Tuesday, driven by geopolitical risks and weak retail sales, housing and industrial output data, which have strengthened bets on a Federal Reserve rate cut.
On Tuesday, oil prices continued their recent upward trend after US President Donald Trump, before meeting with his national security team, posted on social media demanding that Iran “unconditionally surrender” and warning of possible attacks on Iranian leader Ayatollah Ali Khamenei. US weapons are considered crucial for more thoroughly destroying the nuclear program of the Islamic Republic of Iran, more so than anything Israel could do alone.
Stephen Dover, chief market strategist and head of Franklin Templeton Institute, wrote in a client report: “The Middle East conflict has pushed up the risk premium, which is another reason for the global stock market decline. But as long as the conflict does not escalate significantly, we believe the risk premium and oil prices should fall back to lower levels.”
Traders are also closely watching economic data. U.S. retail sales have declined for the second consecutive month, indicating that concerns over tariffs and financial conditions have led consumers to pull back after an initial spending spree at the start of the year. Industrial production has slipped, and homebuilders’ confidence has dropped to its lowest level since December 2022.
Due to the ongoing impact of trade policies, investors should still expect some fluctuations in economic data. Currently, the economy and consumer performance are robust, but there are also some signs of vulnerability. This could pose risks for the second half of the year – especially if employment or spending slows further.
As Federal Reserve officials convene a two-day meeting in Washington, traders continue to bet on a nearly 25 basis point rate cut this year – the first cut is fully priced into market expectations for October. The Fed is expected to keep rates unchanged in June and July, but may signal its intentions on Wednesday by revising its economic and rate projections.
Four consecutive meetings failed to reach an agreement on production cuts, which may trigger another fierce attack from President Trump. But policymakers have made it clear that they need the White House to resolve major issues such as tariffs, immigration and taxation before they take action. Israel’s attack on Iran’s nuclear facilities has also brought another uncertainty to the global economy.
Andrew Tyler, global market intelligence chief at JPMorgan Chase, said: “Despite the fading of negative news this year and investors reaping rewards, there is a strong mentality of buying on dips. However, we believe it’s best to reduce risks.” He told clients this week: “Positioning suggests that the market is prepared for a pullback regardless of the situation between Israel and Iran.”
The latest survey of fund managers by Bank of America shows that global stock markets will outperform the US stock market over the next five years, supporting the growing view among investors that the US market’s dominance is coming to an end.
A survey shows that about 54% of asset managers expect international stocks to be the preferred asset class, while 23% choose US stocks. Only 13% of asset managers believe that gold will bring the highest returns, and 5% bet on bonds. This is the first time that Bank of America’s survey has invited investors to predict which asset class will perform best in five years.
Technical analysis:
Gold: The price is consolidating below the key resistance band of 3400/10. However, after testing below 3380, it quickly rebounded to recover lost ground. Before the Federal Reserve meeting results and the post-meeting press conference, both bulls and bears may be relatively cautious. For the day, it is recommended to observe within the range of 3380-3410; or to focus on buying on dips before the Fed meeting. For larger wave operations, wait for guidance after the meeting. For detailed positions, please consult the plugin.
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and note “666” in the message.
Nasdaq: Yesterday, we still followed the combination of yellow and blue, mainly trying to catch the top signal. Currently, the price center is starting to shift downward. If the Federal Reserve does not cut interest rates tonight and does not give a relatively moderate statement at the post-meeting press conference, the Nasdaq’s adjustment is likely to continue. We will continue to wait for the opportunity to short. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg and note “666” in the message.
Crude oil: Yesterday, we clearly reminded both in the plugin and the article that the yellow area below should be watched for liquidity, and after breaking through 74, the momentum signal should also be paid attention to. After the price broke through the blue block, it retraced for confirmation and then rose to around 75.50 in one wave, which was very consistent with our prompt. Today, continue to pay attention to the signal of momentum breaking through. The price performance area may need to be raised to around 75.50. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and note “666” in the message.
Today’s key economic data and events to focus on:
14:00 UK May Consumer Price Index (Year-on-Year)
17:00 Eurozone May consumer price index final reading
20:30 U.S. Seasonally Adjusted Initial Jobless Claims (in thousands) (to 0614)
